The Exchanges

Q So what are the inherent challenges of two-sided marketplaces, typically consumers and micro entrepreneurs?

A Sure. You know, the inherent challenges that are most often talked about are, are the chicken and the egg. How do you ramp something up? Um, I think that what has drawn me to marketplaces so much is that I do find them to be perhaps the most interesting business model out there because there are so many levers and also because, um, At their core, they're anthropological studies. They are understanding supply and understanding demand and reconciling their, those two groups, um, priorities and needs. And how do you build something that, um, enables both of those groups to get what they're looking for? So every business is a bit different. You mentioned ClassPass and Laurel and Wolf as, as two of my investments, you know, with ClassPass, um, The supply side is, uh, gyms and studios, or sometimes individual, um, instructors for boutique fitness classes. That is a business that is defensible by scale, and so they needed to grow quite quickly. It's also a localized business, so thinking about how do you sprout up new markets quite quickly, what do you need in order to do that? As opposed to Laurel and Wolf is a group of, um, individual interior designers that are providing virtual interior design services to consumers online. All over the country. Who are those people? Where are they located? What are their current challenges, which are not always obvious? Um, I see, you know, myself…

AI assessment note: “understanding supply and understanding demand and reconciling their, those two groups, priorities and needs.”

Q And you said there about getting excited about, about markets and, and one area that you're particularly excited, uh, as am I is, is marketplaces. And so I'd love to talk about the changing face of marketplaces now. And first let's start off Off with why we've seen the explosion of marketplaces in recent years, do you think?

A I think that it's a natural evolution where eBay, I think, is kind of the first true consumer marketplace that is connecting supply and demand and making a market more efficient by nature of connecting people regardless of physical location. You know, effectively, the rise of the internet, which has been, of course, more than just a few years, but the rise of mobile penetration is In my opinion, is really the most important key to what has made marketplaces really take off. People are now, you know, carrying around phones in their pockets, and people who are the supply side of these marketplaces, people or businesses, are able to work from anywhere and want to work from anywhere and also may want to work several different jobs and or, you know, increase or decrease their hours in a given day or week. And marketplaces, you Enable, you know, both the more efficient and effective, but also a more flexible work environment for people.

AI assessment note: “the rise of mobile penetration is In my opinion, is really the most important key”

Q And what was it then that made you transition your thinking to believing that actually it might be something you want to pursue?

A Sure. I think that, you know, part of this was, um, my own personal bias. I had, um, looked at the people I knew in venture capital, the ones who, um, were most outspoken, the ones who had been around the longest, um, and they all fit a very specific prototype. The ones that, and again, this was me looking with my, my blinders on. I think now my point of view is, is much broader as I've actually gone in and understood and met many more people. Um, but what I saw were older, uh, Caucasian males who had operated for 20 years before coming into venture, and I looked at myself as someone in my late twenties at the time, didn't have a long and expansive operating career, and just kind of thought to myself, that couldn't possibly be for me. Uh, so it was really in my, my own mind psyching me out, and a piece of advice I got along the way, I was asking people about, you know, is this something I should seriously consider, was, you know, go out and, um, look for the example you want to find, and you just might find it. Uh, which I, I took to heart and I did do that. And after I, I went and looked around, I found that many of the best investors out there, you know, if you look at the Midas list, which is one list that's put together that has a lot of extremely talented and successful investors on it, they by no means fit that mold that I, that I earlier referenced, um, kind of calmed my…

AI assessment note: “go out and look for the example you want to find, and you just might find it.”

Q And I have to, I have to unpack a few things there, because that's too, too exciting for me as a VC nerd. So you said about the saying no and the feedback cycle. How's your framework for saying no then altered as time's gone on?

A It's a great question. And I think this is something that, um, should be, you know, hopefully you can discuss this with lots of people and have more perspectives out there. I think that for me, and I know that for many other VCs, this idea of saying no so much is not what you expect when you come into this job and you realize that it is what takes up a lot of your time. Um, and so, you know, at the beginning, my perspective was, Oh my gosh, my job is to basically be a dream crusher. This is terrible. You know, like I, I have all these incredibly smart, motivated, passionate individuals that are coming in and for whatever reason, um, not going to be a fit for investment for us. Oh, you know, like that just feels terrible. I think for me, it was really a reframing of what if I treat feedback as a gift? And what if I hold myself to a bar of always being A hundred percent transparent and honest to say, instead of, no, thank you. This is not going to be a fit. Instead of saying, dear entrepreneur, thank you so much for your time. I really found it quite valuable. Here are my real time thoughts and reactions and or your, you know, the thoughts and reactions of my team as to why we're not going to be a fit for investment right now. Usually it's related to the data being too early to tell and Um, just given the stage at which we're investing or a market or market dynamics that we eithe…

AI assessment note: “reframing of what if I treat feedback as a gift?”

Q And what was it then that made you transition your thinking to believing that actually it might be something you want to pursue?

A Sure. I think that, you know, part of this was, um, my own personal bias. I had, um, looked at the people I knew in venture capital, the ones who, um, were most outspoken, the ones who had been around the longest, um, and they all fit a very specific prototype. The ones that, and again, this was me looking with my, my blinders on. I think now my point of view is, is much broader as I've actually gone in and understood and met many more people. Um, but what I saw were older, uh, Caucasian males who had operated for 20 years before coming into venture, and I looked at myself as someone in my late twenties at the time, didn't have a long and expansive operating career, and just kind of thought to myself, that couldn't possibly be for me. Uh, so it was really in my, my own mind psyching me out, and a piece of advice I got along the way, I was asking people about, you know, is this something I should seriously consider, was, you know, go out and, um, look for the example you want to find, and you just might find it. Uh, which I, I took to heart and I did do that. And after I, I went and looked around, I found that many of the best investors out there, you know, if you look at the Midas list, which is one list that's put together that has a lot of extremely talented and successful investors on it, they by no means fit that mold that I, that I earlier referenced, um, kind of calmed my…

AI assessment note: “I found that many of the best investors out there... by no means fit that mold”

Q And talking of reflections on yourself there, before we dive into the kind of the meaty content of the show, how do you reflect on your own success as a VC metric wise? Do you have a kind of determinant which tells you whether you're successful in yourself as a VC? Yeah.

A I love this question. And I think, um, you know, venture is a very strange job and that the feedback cycles are long. Um, you know, one of my partners who's been doing this for almost 20 years says that, you know, it takes you, it takes one person 10 years to know if they're good at this job or not, which is crazy when you think about it. I couldn't give you another example of a job that takes 10 years to give you that feedback. Um, so for me, I would say it's, it's two things. Um, one is, is very short. You know, I think Many people answer this question and that they, the metric that you go by is that they want to be the first call an entrepreneur makes. Um, I think that's a great one, but early in a venture career, you don't have that portfolio of entrepreneurs to, to be taking calls from. And so for me, it's, it is the number of people who I say no to, which in venture you're saying no to investments. 99% of the time who I would still consider a reference to, On me or for something else, a positive reference. The idea being that relationships matter and life is long. And you know, if I can hold myself to any standard, it would be treating people with integrity and respect. And I always want to do that. The second thing I've done on a more specific level is, um, I don't really do this as much anymore, but I would say the first one to two years in venture is I kept an expansiv…

AI assessment note: “it is the number of people who I say no to... who I would still consider a reference”

Q And I have to, I have to unpack a few things there, because that's too, too exciting for me as a VC nerd. So you said about the saying no and the feedback cycle. How's your framework for saying no then altered as time's gone on?

A It's a great question. And I think this is something that, um, should be, you know, hopefully you can discuss this with lots of people and have more perspectives out there. I think that for me, and I know that for many other VCs, this idea of saying no so much is not what you expect when you come into this job and you realize that it is what takes up a lot of your time. Um, and so, you know, at the beginning, my perspective was, Oh my gosh, my job is to basically be a dream crusher. This is terrible. You know, like I, I have all these incredibly smart, motivated, passionate individuals that are coming in and for whatever reason, um, not going to be a fit for investment for us. Oh, you know, like that just feels terrible. I think for me, it was really a reframing of what if I treat feedback as a gift? And what if I hold myself to a bar of always being A hundred percent transparent and honest to say, instead of, no, thank you. This is not going to be a fit. Instead of saying, dear entrepreneur, thank you so much for your time. I really found it quite valuable. Here are my real time thoughts and reactions and or your, you know, the thoughts and reactions of my team as to why we're not going to be a fit for investment right now. Usually it's related to the data being too early to tell and Um, just given the stage at which we're investing or a market or market dynamics that we eithe…

AI assessment note: “reframing of what if I treat feedback as a gift”

Q And you said there about getting excited about, about markets and, and one area that you're particularly excited, uh, as am I is, is marketplaces. And so I'd love to talk about the changing face of marketplaces now. And first let's start off Off with why we've seen the explosion of marketplaces in recent years, do you think?

A I think that it's a natural evolution where eBay, I think, is kind of the first true consumer marketplace that is connecting supply and demand and making a market more efficient by nature of connecting people regardless of physical location. You know, effectively, the rise of the internet, which has been, of course, more than just a few years, but the rise of mobile penetration is In my opinion, is really the most important key to what has made marketplaces really take off. People are now, you know, carrying around phones in their pockets, and people who are the supply side of these marketplaces, people or businesses, are able to work from anywhere and want to work from anywhere and also may want to work several different jobs and or, you know, increase or decrease their hours in a given day or week. And marketplaces, you Enable, you know, both the more efficient and effective, but also a more flexible work environment for people.

AI assessment note: “the rise of mobile penetration is In my opinion, is really the most important key”

Q And talking of reflections on yourself there, before we dive into the kind of the meaty content of the show, how do you reflect on your own success as a VC metric wise? Do you have a kind of determinant which tells you whether you're successful in yourself as a VC? Yeah.

A I love this question. And I think, um, you know, venture is a very strange job and that the feedback cycles are long. Um, you know, one of my partners who's been doing this for almost 20 years says that, you know, it takes you, it takes one person 10 years to know if they're good at this job or not, which is crazy when you think about it. I couldn't give you another example of a job that takes 10 years to give you that feedback. Um, so for me, I would say it's, it's two things. Um, one is, is very short. You know, I think Many people answer this question and that they, the metric that you go by is that they want to be the first call an entrepreneur makes. Um, I think that's a great one, but early in a venture career, you don't have that portfolio of entrepreneurs to, to be taking calls from. And so for me, it's, it is the number of people who I say no to, which in venture you're saying no to investments. 99% of the time who I would still consider a reference to, On me or for something else, a positive reference. The idea being that relationships matter and life is long. And you know, if I can hold myself to any standard, it would be treating people with integrity and respect. And I always want to do that. The second thing I've done on a more specific level is, um, I don't really do this as much anymore, but I would say the first one to two years in venture is I kept an expansiv…

AI assessment note: “number of people who I say no to... who I would still consider a reference”

Q And what do you know now that you wish you'd known at the beginning?

A What? That is a very good question. I think venture can be a lonely I don't think I recognized that coming in. It is a job where you are inherently in the middle of a lot of things. Um, you don't own anything and you are not the leader of anything. You are the enabler of people and ideas, um, which is something that I really love about the job because I'm much more comfortable in that role than I am others. But I, I think that, you know, when I, when I speak with, um, people who are just getting into venture, um, The things that I encourage them to do are one, keep a list of the things you look at and what your reactions are. Like try to expedite your own learning to yourself. And two is build a support system around you of people within and outside your own firm. Because again, because the feedback cycle is so long, you want to be able to, um, learn and support yourself through that.

AI assessment note: “venture can be a lonely I don't think I recognized that coming in.”

Q And talking of kind of consumer marketplaces there, flipping sides of the table, if we, if we move to the SaaS marketplace, then you're an investor in CreateJoy, a marketplace for subscription. So how would you think we'll see SaaS marketplaces then evolve over time and progress?

A Yeah, you know, I think SaaS marketplaces are really interesting, and I don't believe that we've seen, um, many excellent examples of them so far. I'm, I'm, I'm quite interested in that model. Cratejoy, you know, by way of quick background, you know, it provides a SaaS tool for people building subscription, um, businesses, whether those be commerce or digital. I think that here again, it comes back to what does the supply side of the business need? In this case, what do individual merchants need? And when you have a product that is more complicated than just list an item or give a piece of advice or something that is, you know, a quick transaction, but is actually someone that is, um, Running a business that requires some more heavy lifting. We'll see more of these kind of consumer, I think of them as consumer facing SaaS marketplaces. So it does a few things. You know, if I put my investor hat on one, enables merchants to be more successful. It also locks merchants in because they're able to, to run their businesses more effectively. Oftentimes that translates, you know, directly to dollars to the bottom line. Um, they're able to learn from each other and create community. Um, and From an investor point of view, the revenue streams associated with these marketplaces are really compelling because you're able to mix both, you know, SaaS predictable income, as well as kind of tra…

AI assessment note: “We'll see more of these kind of consumer, I think of them as consumer facing SaaS marketplaces.”

Q And talking of kind of consumer marketplaces there, flipping sides of the table, if we, if we move to the SaaS marketplace, then you're an investor in CreateJoy, a marketplace for subscription. So how would you think we'll see SaaS marketplaces then evolve over time and progress?

A Yeah, you know, I think SaaS marketplaces are really interesting, and I don't believe that we've seen, um, many excellent examples of them so far. I'm, I'm, I'm quite interested in that model. Cratejoy, you know, by way of quick background, you know, it provides a SaaS tool for people building subscription, um, businesses, whether those be commerce or digital. I think that here again, it comes back to what does the supply side of the business need? In this case, what do individual merchants need? And when you have a product that is more complicated than just list an item or give a piece of advice or something that is, you know, a quick transaction, but is actually someone that is, um, Running a business that requires some more heavy lifting. We'll see more of these kind of consumer, I think of them as consumer facing SaaS marketplaces. So it does a few things. You know, if I put my investor hat on one, enables merchants to be more successful. It also locks merchants in because they're able to, to run their businesses more effectively. Oftentimes that translates, you know, directly to dollars to the bottom line. Um, they're able to learn from each other and create community. Um, and From an investor point of view, the revenue streams associated with these marketplaces are really compelling because you're able to mix both, you know, SaaS predictable income, as well as kind of tra…

AI assessment note: “We'll see more of these kind of consumer, I think of them as consumer facing SaaS marketplaces.”

Q So what are the inherent challenges of two-sided marketplaces, typically consumers and micro entrepreneurs?

A Sure. You know, the inherent challenges that are most often talked about are, are the chicken and the egg. How do you ramp something up? Um, I think that what has drawn me to marketplaces so much is that I do find them to be perhaps the most interesting business model out there because there are so many levers and also because, um, At their core, they're anthropological studies. They are understanding supply and understanding demand and reconciling their, those two groups, um, priorities and needs. And how do you build something that, um, enables both of those groups to get what they're looking for? So every business is a bit different. You mentioned ClassPass and Laurel and Wolf as, as two of my investments, you know, with ClassPass, um, The supply side is, uh, gyms and studios, or sometimes individual, um, instructors for boutique fitness classes. That is a business that is defensible by scale, and so they needed to grow quite quickly. It's also a localized business, so thinking about how do you sprout up new markets quite quickly, what do you need in order to do that? As opposed to Laurel and Wolf is a group of, um, individual interior designers that are providing virtual interior design services to consumers online. All over the country. Who are those people? Where are they located? What are their current challenges, which are not always obvious? Um, I see, you know, myself…

AI assessment note: “the inherent challenges that are most often talked about are, are the chicken and the egg”

Q Is there any startups can do then to, to get their hands on data sets?

A Many, many startups out there that are building their own data sets, whether For a specific vertical or a specific demographic sometimes, there is the ability to create Q&A type of interfaces to build more personalized bots, and again, when I say personalized, I mean both from a consumer point of view or a business point of view. You can build the data set in a number of different ways, and obviously you want a volume of data to run through that, but, you know, it's becoming easier and easier to, to, Get a bot up off the ground, and it's a matter of how quickly can you teach it or personalize it to, um, the use cases that you're trying to build. So I, my, my general sentiment would be, To start with a vertical, ideally a vertical that is, um, you know, very high value to a consumer and build a depth of knowledge or experience there because people will flock to the things that, that work best in those bots. While they may not be able to leverage the data that a Facebook or a Google already retains, they may be able to partner with messenger or show up in Slack's, um, chapter or sorry, uh, bot directory and, and interface with consumers that way. Because at this point in time, We should be more open and closed in our, in our thoughts around which of these will win and why we have a lot to learn.

AI assessment note: “Many, many startups out there that are building their own data sets”

Q And talking about friction and transition there, I guess the big question for me is will the transition to bots and conversational interfaces represent a major point of disruption or more of an evolution in, in the interface paradigm?

A Yeah. Well, you know, I think it's kind of funny because bots have been around for a very long time. You know, we, whenever you talk to a customer service recording, um, You're talking to a bot effectively. So the biggest question I have and the one that I find most interesting is the question that I think you're asking too of, you know, where will these bots live? Do they, do they, do they live on their own? Do they live in existing platforms? Do they live on my phone? Do they live in my contact list? My hypothesis is that at least at the beginning for sure, and I think going forward, they will live everywhere. One bot, I should think of a bot like I think of a contact person. It should be in my contact list. It should be in my Facebook messenger. Maybe it's in my Slack. Maybe it pops up when I am in another app or on another website to say, Hey, let me be helpful to you in some way, shape, or form. Uh, the idea of having a bot that is plugged into the things that I am working on is super interesting because bots have the ability to, to learn quite quickly as we've seen with some funny examples. Um,

AI assessment note: “So the biggest question I have and the one that I find most interesting is”